For a long time, in order to take advantage of a vibrant tech ecosystem (not to mention attract investment), you needed to base your operations somewhere near a city with a “Silicon” nickname. There was Silicon Valley, of course. There’s also Silicon Alley (New York), Silicon Beach (Los Angeles), Silicon Hills (Austin), and even sites abroad like Silicon Wadi in Israel.
Today, it’s fair to say that you can build your business anywhere. Every single U.S. state is home to at least one million-dollar tech company. If you have a good idea and a good business model, opportunities for investment and expansion will find you.
The ecosystems around technology hubs in San Francisco and New York, however, continue to encourage ideation, incubation, and the growth of tech companies. But as costs in those cities continue to rise, and the competition for the best talent gets even tighter, emerging companies will find it difficult to scale affordably.
Looking past the hubs
Let’s say you’ve already put down roots in a place like New York or Los Angeles. You’ve done well so far, but hiring for certain roles or positions has proved challenging. It might be time to look beyond your traditional borders into a new city. You might also come to this conclusion before you even make your first hire.
That’s a nice idea, but where do you go? Just to where the cost of living is cheapest, or near enough to a university with a great tech or marketing program that you can utilize that talent pipeline?
We recently released a report at Fundera on an emerging class of “untapped” cities. These are smaller cities that have a combination of factors that might make them the next tech hub, thanks to their quality of talent, lower costs, and evidence of venture capital investment.
The top five untapped cities are as follows:
- Madison, WI
- Plano, TX
- St. Paul, MN
- Cincinnati, OH
- Durham, NC
Other top picks include St. Louis, MO, Chandler, AZ, and a few cities that you might already recognize as emerging tech cities, such as Pittsburgh, PA and Colorado Springs, CO.
The benefits of breaking the mold
Just to clarify, you won’t be the only tech company or growing business in these cities. But they don’t have nearly the clout that the Silicon cities of the world boast.
And that’s a good thing.
In the years to come, expect more and more tech companies to emerge from cities like these—places where companies don’t have to spend extravagantly just to keep up, and can still invest meaningfully in their team, culture, and product.
It’s true that these cities can’t match the VC investment that tech companies in San Francisco have seen—over the course of a three-year period, the San Francisco area saw thousands of VC deals, compared to just 73 for Madison.
Consider the flipside of this, however: There will be less competition for attention in a city without thousands of entrepreneurs vying for the attention of the ecosystem. You’ll spend less (on public relations, for example) to get more. And thanks to advances in technology, you’re never more than a video call or even plane ride away from taking meetings with investors, partners, and mentors who can alter the trajectory of your business.
Going adjacent, or even remote
We also found that some of the “untapped” cities are urban areas that lay on the fringe of hubs, such as Irvine, CA or Jersey City, NJ. Moving your operations to one of these cities is also a good way to remain in the ecosystem of a tech hub while doing your part to expand the reach of that hub.
There’s another possibility altogether, of course: Building your team as a remote entity, as many of today’s tech companies have done. By doing this, you won’t tether your team to any one location, city, or nation—and you’ll save on things like office rental costs as well. (Though you’ll need to take some of those savings and invest in top-of-the-line communication and collaboration tools to ensure you don’t miss a beat.)
The bottom line is that the startups of the future are going to look much different than those from years past. They won’t all come from the same incubators or have the same investors in common—and they’ll have different cultures, values, and ideas of what makes for a successful company.
Expect the next decade to be full of stories of innovative companies emerging from unexpected places and changing the world of tech and beyond. Perhaps those stories will be yours. That’s an exciting future to imagine, don’t you think?
Written by Jared Hecht.
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